Updated Regions and Marginal Loss Factors: FY 2019-20 July 2020 A report for the National Electricity Market Important notice PURPOSE This document has been prepared by AEMO as the ‘Regions Publication’ under clause 2A.1.3 of the National Electricity Rules (Rules), and to inform Registered Participants of the 2019-20 inter-regional loss equations under clause 3.6.1 of the Rules and 2019-20 intra-regional loss factors under clause 3.6.2 of the Rules. This document has effect only for the purposes set out in the Rules. The National Electricity Law (Law) and the Rules prevail over this document to the extent of any inconsistency. DISCLAIMER The calculation of the loss factors presented in this document incorporates information and forecasts from third parties. AEMO has made every reasonable effort to ensure the quality of the information in this publication but cannot guarantee that any information, forecasts and assumptions are accurate, complete or appropriate for your circumstances. Explanatory information in this document does not constitute legal or business advice, and should not be relied on as a substitute for obtaining detailed and specific advice about the Law, the Rules, any other applicable laws, procedures or policies or the future development of the National Electricity Market power system. Accordingly, to the maximum extent permitted by law, AEMO and its officers, employees and consultants involved in the preparation of this document: • make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of the information in this document; and • are not liable (whether by reason of negligence or otherwise) for any statements or representations in this document, or any omissions from it, or for any use or reliance on the information in it. COPYRIGHT © 2019 Australian Energy Market Operator Limited. The material in this publication may be used in accordance with the copyright permissions on AEMO’s website. VERSION CONTROL Version Release Changes date 1 29/3/2019 Draft 2019-20 MLFs published. 2 1/4/2019 Updated draft 2019-20 MLFs published, AEMO deferred the publication of final 2019-20 MLFs to allow proponents to revise profiles. 3 10/5/2019 Final 2019-20 MLFs published including revision of profiles for 29 generators. 4 21/6/2019 Updated final 2019-20 MLFs published following further review of generation modelling. 5 21/4/2020 April 2020 including the following new and revised connection points: • QLD Generation: Marryorough Solar Farm (Brigalow Solar Farm), Yarranlea Solar Farm, Oakey 2 Solar Farm Version Release Changes date • NSW Generation: Bomen Solar Farm, Eastern Creek 2, Finley Solar Farm, Limondale Solar Plant 2, Narrowmine Solar Farm, Nevertire Solar Farm, South Keswick Solar Farm, Teralba Power station, Wilga Park A, Wilga Park B • NSW Load: Newcastle, Tomago (132kV) (and removed inactive connection points Alcan, Beresfield, Kuri 11kV, 33kV and 132kV), Buronga, Grafton East 132, holroy (Ausgrid), Tumut 66 (Ausnet DNSP), Potts Hill (132kV, 11kV), Chullora, Rockwood Road, Narrabri. • VIC Generation: Elaine Wind Farm • TAS Generation: Granville Harbour Wind Farm, Wild Cattle Hill Wind Farm 6 22/7/2020 July 2020 including the following new and revised connection points: • NSW Generation: Gullen Range 2 Wind Farm, Goonumbla Solar Farm, Parkes Solar Farm, Limondale Solar Plant 1 • VIC Generaion: Bulgana Green Power Hub, Cherry Tree Wind Farm • SA: Hornsdale Battery © AEMO 2020 | Updated Regions and Marginal Loss Factors: FY 2019-20 3 Introduction This document sets out the updated 2019-20 National Electricity Market (NEM) intra-regional loss factors, commonly referred to as marginal loss factors (MLFs), calculated under clause 3.6.2 of the National Electricity Rules (NER). As well as MLFs, this document includes the 2019-20 NEM inter-regional loss factor equations and loss equations (NER clause 3.6.1) and restates the following information published on 1 April 2019 related to NEM regions: • Virtual transmission nodes (VTNs). • Connection point transmission node identifiers (TNIs). • Regions, regional reference nodes (RRNs), and region boundaries. Loss factors apply for 2019-20 only, and should not be relied on as an indicator for future years. AEMO continues to work with participants and the Australian Energy Market Commission (AEMC) to identify efficient short and longer-term solutions to manage the impact of potentially volatile MLFs in the rapidly changing NEM, in the interests of electricity consumers. Marginal loss factors in a transforming NEM The NEM continues to transform, driven by new technology, a changing generation mix, and rapidly developing areas of high renewable energy penetration. This transformation is leading to large year-on-year changes in MLFs calculated under the current regulatory framework and methodology. In many locations, MLFs have fallen by large margins, and this in turn has material financial implications for existing and intending market participants. AEMO is actively engaged with industry and the AEMC on options to minimise these impacts of current rules, both in the relatively short term and in the longer term through appropriate amendments to the National Electricity Rules (NER): • AEMO continues to support the work program currently being progressed by the AEMC that will consider why and how losses in the NEM are changing and what measures may be introduced to make these changes more manageable for generators. This will include consideration of two rule change requests from Adani Renewables which deal with issues related to the existing MLF framework in the NER and how this might be improved. • In the longer term, the AEMC is progressing a work program to examine how generation and transmission investment may be more effectively coordinated, including how generators gain access to the transmission network. This longer-term work program is taking a more holistic view of issues related to losses. The large year-on-year changes in MLFs demonstrate the ongoing need for comprehensive planning of both generation and transmission to minimise costs to consumers. All-of-system planning documents, such as the 2018 Integrated System Plan (ISP), are critical in the provision of information to participants regarding the needs and changes to the power system. MLFs reflect the quality of input assumptions After publishing the initial draft 2019-20 MLFs on 8 March 2019, AEMO received substantial and credible new information on the status of several committed projects which did not align with the information that AEMO had considered when calculating the draft loss factors. This meant the draft MLFs were unlikely to reflect © AEMO 2020 | Updated Regions and Marginal Loss Factors: FY 2019-20 4 actual marginal losses between the regional reference node and each transmission connection point in many parts of the network. Given the potential materiality of this new information for MLF calculations, and after informing the Australian Energy Regulator (AER), AEMO considered it necessary to defer finalisation of the 2019-20 MLFs beyond the normal 1 April publication date. This allowed AEMO to seek confirmation of the most up to date generation profiles for relevant projects from proponents. In April 2019, AEMO wrote to proponents requesting updates on the status and commissioning timelines for 46 generation projects, and received advice that the generation profile of 29 projects needed to be revised. AEMO subsequently completed the assessment of MLFs for 2019-20 using this updated information and published them in May 2019. In June 2019, AEMO discovered that some generators in the original 2019-20 MLF calculations, as published in May, were modelled with incorrect generation profiles. To ensure MLFs are as accurate as possible, AEMO completed a full review of how generation is modelled in the MLF calculation so that the calculation conforms with the Forward-Looking Transmission Loss Factors (FLLF) methodology. AEMO has now recalculated the 2019-20 MLFs and is updating them in this document, which replaces the version published in May. Observations and trends MLFs represent electrical transmission losses within each of the five regions in the NEM – Queensland, New South Wales, Victoria, South Australia, and Tasmania. In general, MLFs have declined between 2018-19 and 2019-20. The main changes in regional loss factors are, in summary: • Reduction in MLFs at connection points in central and northern Queensland. • A very large reduction in MLFs at connection points in south-west New South Wales, with a moderate reduction in the Australian Capital Territory and Snowy subregions, and a moderate increase in northern New South Wales. • A very large reduction in MLFs at connection points in north-west Victoria, a moderate reduction in central Victoria, and a small increase in MLFs at connection points in northern Victoria. • Increase in MLFs at connection points in the south-east and Riverland area in South Australia. • A general decrease in MLFs at connection points in Tasmania. Changes between the 2018-19 MLFs and the 2019-20 MLFs are mainly driven by the large volume of new generation projects connecting to the NEM. Of the 46 new generator connections considered, 13 are registered and the remaining 33 are included in the 2019-20 MLF study due to their committed1 status, representing approximately 4,500 megawatts (MW) of new capacity that is being considered for the first time. New generation is increasingly connecting at the periphery of the transmission network, including north-west Victoria, south-west New South Wales, and north and central Queensland. In these areas, access to renewable resources is good, yet the network is electrically weak and remote from the regional reference node. This additional generation has resulted in a large reduction in MLFs in these areas. The reduction in MLFs is exacerbated by the high correlation in generation profiles, where new generation tends to be running at the same time as other nearby generators, as well as during periods of light load in the area.